ISLAMABAD, Nov 18: The looming power shortfall is likely to affect the overall targeted growth rate of the country, particularly in view of numerous problems facing the government in attracting foreign investment in the coal mining sector, official sources told Dawn on Saturday.
The Ministry of Petroleum and Natural Resources has informed the higher authorities that promotional activities and fiscal incentives could not attract international companies to set up integrated coal mining and power generation projects, said the sources.
They said that the ministry had listed a number of reasons hindering foreign direct investment (FDI) in the coal mining sector, including inadequate institutional arrangements and lack of focus on coal development, harsh climatic conditions, challenging mining conditions, location disadvantage, non-existence of industrial support services, large capital requirement for integrated coal mining and power generation project, absence of professional expertise in developing large open cast mine and commissioning power project, absence of authentic data on hydrology budget, non-familiarity with the new cost-efficient and clean coal technologies, and non-availability of developed human resources.
According to the sources, the ministry conceded that the country had no machanised coal mining industry, and human resources needed to be developed within the country to harness huge coal reserves in the country, 175 billion tons of which existed in Thar alone. It said coal production in Pakistan stood at 5 million tons per year, and to achieve the targets set under the Energy Security Action Plan, 120 million tons needed to be mined for generation of 2000MW of power by 2030.
In view of the various problems, central and Sindh governments had agreed to jointly establish Thar Coal Mining Company to develop coal as ‘strategic national asset’ in line with the Energy Security Action Plan and restrict the unfavourable impact of high cost of energy on the national economy, said the sources, adding that Sindh had been assured a ‘large amount’ as coal royalty, besides cheap electricity through foreign investments to be attracted by the proposed mining company.
One of the major objectives of establishing the company is to encourage independent power producers (IPPs) to plan commissioning of power plants on Thar coal.
The Ministry of Petroleum and Natural Resources and the Sindh government would be the equity holder partner of the proposed company which would be formally approved by the Executive Committee of the National Economic Council (Ecnec) soon, they said.
On the commencement of physical activities on mine development, Private Power and Infrastructure Board (PPIB) would invite proposals for setting up 1000MW power plant.
"In case of poor response, the Government of Pakistan will direct Wapda to commission first power plant," a well-placed source said.
According to the source, the mission of the company will be to produce and market the planned quantity of coal and coal products efficiently and economically with due regard to safety, conservation and quality. The main thrust of the company will be to orient its operation towards market requirements maintaining at the same time financial viability to meet resource needs. Besides, the company will acquire and develop available cost-efficient clean coal technologies for harnessing Thar coal for other utilisation options like liquefaction, co-generation and extraction of high unit value chemicals. It will also develop an open cast mine on an evaluated coal block(s) at Thar having a capacity of minimum 6 million tons annually for supply to 1000MW power plant(s).
A decision has also been taken to enhance the share of coal in over all energy mix from the present 7 per cent to 20 per cent. The Thar Task Force (TFF), now head by the prime minister instead of the president, will facilitate development of infrastructure and commissioning of coal projects in Thar. The ministry informed the higher authorities that due to lack of developed human resources in the country to develop the proposed open cast coal mine, a coal mining company having verifiable experience would be selected through international competitive bidding. The company would be assigned to develop the mine on turnkey basis.